By Atoyebi Nike
The naira appreciated against the British pound on Wednesday, closing at N1,945/£ in the official market, as global currency markets experienced heightened volatility.
The Central Bank of Nigeria’s (CBN) decision to float the naira and harmonize multiple exchange rates has boosted investor confidence, keeping the currency in a consolidation phase between N1,920/£ and N2,100/£ in the parallel market this month. Improved foreign exchange inflows and a fifth consecutive decline in inflation have strengthened short-term bullish momentum for the naira.
Over the past 12 months, the naira has gained 10.56% against the U.S. dollar and 2.45% in the last month, supported by stronger FX inflows and the CBN’s efforts to promote non-dollar transactions.
Meanwhile, the British pound strengthened globally despite expectations of further interest rate cuts by the Bank of England (BoE) this year. Weaker UK labour market data including a rise in unemployment to 4.8% and slower wage growth fueled dovish bets, with markets pricing in 46 bps of cuts at the BoE’s remaining meetings in 2025.
The pound traded around $1.3370 after rebounding from Tuesday’s session, helped by a weaker U.S. dollar. The U.S. Dollar Index fell 0.25% to 98.8, following cautious remarks from Fed Chair Jerome Powell on labor market weaknesses and expectations of a 50 bps rate cut by year-end.
